The European Union - Australia Free Trade Agreement What Does It Contain And When Will Apply?

On 24 March 2026, the EU and Australia announced the conclusion of their long, drawn-out negotiations for a free trade agreement (“FTA’), together with a defence and security framework.

The agreement appears to follow the model of other recent EU FTAs eliminating tariffs on most industrial goods (except steel in the case of the EU) while protecting agriculture through tariff rate quotas. It also confirms and develops many WTO disciplines on matters such as customs facilitation, trade remedies, sanitary and phytosanitary measures, technical regulations, services, subsidies and intellectual property. The agreement also extends, as between the EU and Australia, the sectors and entities covered by the WTO Government Procurement Agreement, potentially expanding access for Australian suppliers to EU public tenders and vice versa.

Similarly, the FTA largely meets the Australian government’s primary aim to agree to FTAs that maximise tariff reductions for Australian exporters, with 97.8 per cent of Australian exports expected to be tariff free upon ratification. Furthermore, akin to other FTAs which Australia has recently entered, including agreements with the United Kingdom and India, the agreement seeks to facilitate the greater mobility of professionals between the EU and Australia through a streamlined professional qualifications recognition process. 

Like other modern FTAs, the agreement goes beyond the WTO by including chapters on sustainable trade, developing energy and resources, investment and capital movements, involving civil society (with a special mention of Australia’s “First Nations peoples”), facilitating benefits to small and medium-sized companies, digital trade, competition policy and transparency. 

Both parties emphasise the coverage of critical raw materials, supplies of which have been disrupted recently. This is not surprising, given that the current Australian government has emphasised its desire for Australia to become a renewable energy superpower, while the EU has also expressed its need to diversify its critical minerals supply chain. As such, the elimination of EU tariffs on critical minerals, lithium hydroxide, hydrogen, and hydrogen carriers represent a strategically significant outcome of the FTA. Similarly, while the EU was unable to secure the abolition of Australia’s 33 per cent luxury car tax, the threshold for electric vehicles has been lifted, along with the abolition of a 5 per cent import tax on European cars, which is expected to benefit EU automotive exporters in particular.

An important feature of the agreement is the way in which it deals with protected geographical indications (GIs). The EU generally seeks to protects its vast array of geographical indications especially for foodstuffs and wines and spirits. These protections can be contentious in jurisdictions such as Australia, where certain product names have become widely used as generic descriptors. A compromise has been reached, reserving a large number of GIs (165 for agriculture and foodstuffs and 231 spirit names and a long list of wines) for the EU while “grandfathering” (i.e. allowing continued use) of others that are widely used in Australia, such as “feta” and “gruyère”. Prior to this FTA, Australia had only implemented a legislative framework for GIs relating to wine. As such, there will be need for Australia to implement new legislative arrangements governing the wholesale recognition and protection of GIs.

The agreement also appears to contain comprehensive binding dispute settlement provisions modelled on those of the WTO.

One matter that is not entirely clarified is how this agreement will relate to the industrial policy measures that the EU is introducing to improve its competitiveness, such as the proposed tariff rate quotas on steel and Industrial Accelerator Act (“IAA”). Both parties mention that steel is excluded from EU tariff liberalisation but do not mention the more difficult issue of the quotas that it will impose. The IAA proposes to reserve public procurement contracts and other public support (principally subsidies) to companies using “EU origin” goods. While the currently proposed would deem goods from free trade partners to be “equivalent” to those from the EU, this is conditional and it remains to be seen how this will be refined during the legislative process. Also, there appears to be no provision dealing with the application of the EU carbon border adjustment mechanism except for an obligation to comply with climate agreements and to cooperate in combatting climate change.

As is usual with this kind of agreement, all that has been signed is a text marking the end of the negotiations. Judging by the progress of other recent EU agreements, actual signature may be 6 months away while ratification and full entry into force, which will require the consent of the European Parliament, will take even longer. The agreement appears to be an “EU-only” agreement that does not require separate ratification by the Member States. The pathway to ratification in Australia will theoretically be simpler, with the Australian Parliament typically finalising its scrutiny of treaties in four to six months.

However, it remains to be seen whether the agreement will be able to overcome the opposition of agricultural lobby groups in both Europe and Australia, who may seek to obstruct the adoption of the deal. Already, French livestock producers have called for the European Parliament to block the agreement due to the perceived generosity of the beef and lamb quotas. Conversely, the Australian Farmers’ Federation has criticised the Australian government for entering into the agreement, on the basis that it does not secure a sufficiently meaningful increase in access to the European market. 

Ultimately, the world of trade is undergoing radical change at the moment as previous agreements such as the WTO Agreement are called into question and long-established principles of non-discrimination and commitment to multilateralism are weakened. The draft agreement between the EU and Australia may signal a renewed attempt to establish lasting and predictable rules or may become caught up in the of the current trend to unilateralism and protectionism. 

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